(Bloomberg) — Equities in Asia opened higher Thursday after Wall Street resumed a rally as robust earnings helped overcome worries about persistent inflation.
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Shares in Australia, Japan, Hong Kong and South Korea all advanced. Taiwan stocks reached an intraday record high in their first trading day since Feb. 5, boosted by a 9.8% gain by Taiwan Semiconductor Manufacturing Co. The Golden Dragon index of US-listed Chinese companies climbed 3.5% in New York trading, in a sign of upward pressure for Chinese equities. Mainland markets remain closed Thursday.
US futures were little changed in Asia after the S&P 500 rose 1% Wednesday to close above 5,000 points. The gains retraced the bulk of Tuesday losses when US core inflation for January rose more than expected, muddying the path ahead for Federal Reserve rate cuts, as investors continued to parse the data.
“We are not changing our call for risk-on factors and cyclicals to outperform over the course of 2024,” 22V Research strategists led by Dennis DeBusschere wrote in a note Wednesday. “Over time we think it will become clear that January was more one-off vs a new CPI trend.”
Treasuries were little changed after a Wednesday rally that wiped six basis points from the 10-year yield. Australia and New Zealand yields fell Thursday. An index of the dollar was slightly weaker.
TSMC’s advance sent it to a record high. Morgan Stanley lifted its target price for the company by 9%, anticipating the chip giant will post more “meaningful” revenue from artificial-intelligence chips this year.
“The migration to bigger large language models will boost demand for higher-end chips, which benefits TSMC’s leading-edge foundry business,” analysts including Charlie Chan wrote in a note.
Gains for US stocks on Wednesday were helped by large tech companies. The NYSE Fang+ index that includes Nvidia Corp, Microsoft Corp and Apple Inc rose 2% — twice as much as the broader market. Favorable earnings reports also helped. Uber surged 15% after announcing $7 billion in share buybacks, while Robinhood Markets Inc. rose 14% as revenue topped estimates.
Japan unexpectedly slipped into recession, fourth-quarter data released Thursday showed, after the economy contracted for a second quarter in a row. The yen was little changed at 150 per dollar — after touching a three-month low this week.
Australian hiring edged up at the start of the year, while unemployment climbed to a two-year high, highlighting the nation’s cooling labor market and prompting bets on an earlier interest-rate cut. The Aussie dollar erased gains after the data and was little-changed versus the greenback.
Traders have further scaled back Fed cut bets, and have largely given up hope of a cut in March. The chance of one the following meeting in early May stands at 1-in-3, down from almost full certainty two weeks ago.
“The ‘hot’ inflation data do not change our base case for a soft landing,” said Solita Marcelli at UBS Global Wealth Management. “But we are continuing to monitor the incoming data and the start of rate cuts could be delayed should the economic prints remain strong.”
Federal Reserve Bank of Chicago President Austan Goolsbee said Wednesday that slightly higher inflation data for a few months would still be consistent with a path back to the central bank’s 2% goal. Fed Vice Chair for Supervision Michael Barr, meanwhile, said US policymakers need to see more data showing inflation is heading back to target levels before they start cutting rates.
In Asia, data set for release includes January trade figures for India, and a monetary policy decision in the Philippines. In Indonesia, meanwhile, Defense Minister Prabowo Subianto declared victory in Wednesday’s presidential vote.
Data due Thursday in the US includes US Empire Manufacturing, initial jobless claims, industrial production, retail sales and business inventories.
Elsewhere, BHP Group Ltd. said it will have an impairment charge of $2.5 billion in its half-yearly results to be announced next week relating to nickel assets.
Oil dropped Wednesday after the US reported crude inventories rose to levels last seen in November. Gold was little changed at $1,992 per ounce. Bitcoin topped $52,000, and is trading at levels not seen since December 2021.
Key Events This Week:
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US Empire manufacturing, initial jobless claims, industrial production, retail sales, business inventories, Thursday
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ECB President Christine Lagarde speaks, Thursday
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Atlanta Fed President Raphael Bostic speaks, Thursday
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Fed Governor Christopher Waller speaks, Thursday
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ECB chief economist Philip Lane speaks, Thursday
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US housing starts, PPI, University of Michigan consumer sentiment, Friday
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San Francisco Fed President Mary Daly speaks, Friday
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Fed Vice Chair for Supervision Michael Barr speaks, Friday
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ECB executive board member Isabel Schnabel speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 9:09 a.m. Tokyo time
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Nasdaq 100 futures were little changed
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Hang Seng futures were little changed
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Japan’s Topix rose 0.3%
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Australia’s S&P/ASX 200 rose 0.9%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0733
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The Japanese yen was little changed at 150.48 per dollar
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The offshore yuan was little changed at 7.2231 per dollar
Cryptocurrencies
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Bitcoin rose 0.3% to $51,912.14
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Ether was little changed at $2,778.89
Bonds
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The yield on 10-year Treasuries was little changed at 4.25%
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Japan’s 10-year yield declined 2.5 basis points to 0.725%
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Australia’s 10-year yield declined six basis points to 4.21%
Commodities
This story was produced with the assistance of Bloomberg Automation.
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